Why Washington Really Likes Itself

IF it sometimes seems as if Washington exists in a totally different economic universe from the rest of us, rest assured: it does. According to Gallup, the District of Columbia is the most economically optimistic part of the country.

Every day, the polling organization surveys Americans of all income levels about whether they think current economic conditions are good, and whether the economy is getting better. The results of these two questions make up Gallup’s Economic Confidence Index.

The latest index report shows that the District of Columbia is far more confident in the economy than any state, by a long shot. In every state, most residents think the economy is getting worse; in the nation’s capital, fully 60 percent think the economy is getting better.

And yet the District of Columbia also has an unemployment rate above the nation’s — 10.8 percent, compared with 9.1 percent — and persistent ills like crime and poverty.

“If ever there were a place where people not only tend not to face economic facts, but it’s almost their purpose not to face economic facts, it’s Washington,” said P. J. O’Rourke, a contributing editor at The Weekly Standard and a political satirist.

What’s going on? How can an economy ravaged by double-digit joblessness be so Pollyannaish?

First, note that Gallup’s economic confidence poll surveyed only those who are employed, and the employed are going to have a sunnier outlook than the unemployed. Yet that positive bias would be true in every state Gallup surveys, and the capital still has a much rosier outlook.

Maybe that’s because Washington is richer, on the whole, than any American state: it has a per-capita income of $71,011, compared with the national average of $40,584, according to the Bureau of Economic Analysis. And the geysering income streams that support Washingtonians are reliable in good times and bad.

“There are a lot of occupations here that tend to be pretty high-paid that are kind of recession proof,” said Jared Bernstein, a senior fellow at the Center on Budget and Policy Priorities, a liberal research organization in Washington, and a former economic adviser to Vice President Joseph R. Biden Jr.

The city’s economy is built not only on government employees, but also on defense contractors, nongovernmental organizations and research institutions that get federal money. Unlike just about any other earnings source, federal funds have continued to flow freely through recession and recovery.

What’s more, the government is moving ahead with major overhauls of financial regulation and health care, and Congress has its sights on taxes and spending, as illustrated by the debt-ceiling battle. All these targets have attracted major industrial stakeholders, injecting billions into the Washington lobbying industry.

“Let’s say you have a whole new department of financial consumer affairs,” Mr. O’Rourke said. “That means a huge growth in the corresponding lobbying industry. If you’re a credit card company and you don’t have a lobbyist there, you’ve got to be suicidal.”

In turn, these factors have helped prop up the housing market, unlike elsewhere in the country where foreclosure rates seem as high as pessimism.

According to the government’s housing price index, the worth of homes nationwide fell 2 percent last quarter. In Washington, they grew 2 percent. Zillow, a company that tracks real estate data, says three of every thousand homes in Washington are in foreclosure, less than a third the rate for the nation.

There is, of course, a large subset of Washingtonians who are not flush with federal largesse, as indicated by the high jobless rate.

Washington has one of the nation’s highest poverty rates, with 18.4 percent of residents living below the poverty line, a rate exceeded by only three states in 2009, the most recent year for which data are available.

Washington also has the highest income inequality in the country, according to the Census Bureau. For decades there has been a sharp divide between the haves and the have-nots in Washington. Northwest Washington is mostly white and wealthy; the other sections are largely black and poor.

“I do think that the views of politicians, specifically, are warped by their social networks and backgrounds,” said Larry M. Bartels, a political scientist at Vanderbilt University and author of “Unequal Democracy.”

Perhaps this enduring divide explains a complacency among the better-off toward how others live. To the extent that those in Washington who are suffering from economic downturn are the same people who are normally suffering during boom times, the heightened pain may not be that noticeable. “There are high and deep pockets of poverty in Washington, but they’ve been here for a while,” Mr. Bernstein said.

Longtime Washingtonians may also have become inured to the cries that the national economy is teetering on the edge of the abyss. There are, after all, myriad politicians and pundits who have built entire careers on proclamations that the sky is falling.

“There are so many people who have had some connection to government, or been around this process for so long, that they’re a little more jaded about whether this is worse than it’s ever been,” said Norman Ornstein, a resident scholar at the American Enterprise Institute and a longtime policy adviser and operative. “Although now there are reasons to think it actually is.”

At any rate, with all the talk of deficit reduction in Washington lately, there is reason to think that the local economic outlook may soon fall in line with the rest of the real world.

A version of this news analysis appears in print on August 28, 2011, on page SR6 of the New York edition with the headline: Why Washington Really Likes Itself. Order Reprints|Today's Paper|Subscribe